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Information on impacts of budget reductions to TANF

In the past year, the Governor and WorkFirst Subcabinet have had to make difficult decisions to address a growing shortfall in the state’s budget for Temporary Assistance for Needy Families (TANF), driven by increased demand for services by families affected by the economic recession.

This budget, often referred to as the ‘TANF Box’, includes funding for Washington’s TANF program, WorkFirst, and the child care subsidy program, Working Connections Child Care.

The WorkFirst Subcabinet is comprised of the leaders of the six state agencies that administer WorkFirst: Office of Financial Management, Department of Social and Health Services, Employment Security Department, Department of Commerce, Department of Early Learning, and State Board for Community and Technical Colleges.

TANF Reductions Announced in August 2010

In August 2010, the WorkFirst Subcabinet announced cuts totaling $51 million to bring the TANF budget in balance. Those reductions included a lowering of the income eligibility limit for Working Connections Child Care from 200% to 175% of the federal poverty level (effective October 1 of this year), and limited hardship extensions to WorkFirst’s 60-month time limit (which will become effective in February 2011).

All of the reductions needed to address what was at the time a $51 million budget shortfall are described in Table A.

Additional Reductions for WorkFirst

In November 2010, the WorkFirst Subcabinet announced additional TANF reductions to achieve the 6.3 percent across the board cuts directed by the Governor. These reductions totaled $19 million.

Following this announcement, it became clear that further reductions would be needed to keep the WorkFirst budget in balance.

At the national level, Congress has not yet approved an extension of the now-expired TANF Emergency Contingency Fund and it is unlikely that this will happen. The TANF budget assumed the state would receive $62 million in extended TANF Emergency Contingency Funds for the current fiscal year.

In addition, the caseload forecast for Working Connections Child Care and WorkFirst indicates a $25 million growth in the programs.

Other revenue impacts contribute to the deficit, including a higher than assumed shortfall in the Employment Security Department Contingency Fund of approximately $7.8 million. Finally, there is approximately $7.2 million in lost savings from the $51 August reductions due to systems or statutory changes which could not be implemented as assumed.

However, the passage of the TANF extension resolution by Congress in September 2010 included an appropriation of more than $500 million in Regular TANF Contingency funding for states. The funds would be disbursed on a month by month basis to all states as they apply

Washington State submitted its application on October 1, 2010 (the earliest date applications were accepted), and has received just over $19 million of this funding. The state does not anticipate any further Regular TANF Contingency funds will be available

As a result, by November 2010, the deficit in the WorkFirst budget reached approximately $82 million for the current fiscal year and $225 million for the next biennium.

Table B describes the additional reductions that were announced in December 2010. Included in this table are reductions necessary to achieve the 6.3 percent across the board cuts directed by the Governor. The 6.3 percent reductions are shaded in the table.

All but one of the reductions identified in Table B are carried forward in the Governor’s proposed budget for the 2011-13 biennium. The one exception to this is the reduction in the maximum amount of Diversion Cash Assistance that eligible families can receive, which the Legislature authorized during the Special Session held on Saturday, December 11.

As a result of conversations with key legislative members and stakeholders and to preserve Working Connections Child Care for low-income working families, the Governor and her WorkFirst SubCabinet will not limit new entrants to the Working Connections Child Care subsidy program to TANF or TANF-eligible families only as previously announced. However, the savings assumed by this change are still necessary.

Table C describes the additional reductions that will be implemented to achieve those savings. These reductions were announced on March 4, 2011.